DraftKings abandons plan for betting surcharge after FanDuel doesn't follow suit

• Now it looks like it was more of a trial balloon — either in hopes that competitors would follow, states would lower taxes or both.

The intrigue: The surcharge was set to affect bettors in Illinois, New York, Pennsylvania and Vermont, where sports gambling companies must relinquish a higher portion of their revenue to taxing authorities than in other states.

• The company said the hit to customers would be in the low- to mid-single digits per bet.

The latest: DraftKings' fiercest competitor, Flutter Entertainment's FanDuel, rejected the idea on Tuesday in an earnings call after the bell.

• Less than two hours later, DraftKings gave up on it too, issuing a statement saying it was going back to business as usual.
• "We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge," the company said in a statement. "We have always committed to delivering the best value in the industry to our loyal customers."
• Penn Entertainment's ESPN Bet had also said last week that it would not implement a surcharge anytime soon, though it said it would monitor the DraftKings plan to see how it goes.

💭 Our thought bubble: It's already extremely hard to be a winning sports bettor — and the surcharge was poised to make it even harder.

• "The DraftKings surcharge would require bettors to win at a 53.3% rate to break even, a sharp increase from the standard rate of 52.4%," Legal Sports Report explained.

What we're watching: The sports betting companies will look for alternative ways to bolster margins in high-tax states.

• Flutter already signaled that it would dial back on promotions: "Moderating levels of generosity" and "reducing local marketing is the best customer option," Flutter CEO Peter Jackson said Tuesday on the earnings call.